Insurance and financial protection are never “party talk”  and no one ever gets excited about a great insurance policy so it stands to reason most of us rarely think about what insurance we have in place if any, and assess whether it is appropriate.

When we are young, we like to think we are bullet proof and things like life insurance and income protection are so far from the top of our priority list that we do little if anything about making sure we are financially protected in the event of something happening to us, so of us just flat out think we don’t need insurance. I understand this thinking for sure, no one likes paying insurance premiums!

A colleague of mine has a great line to put into perspective; he says “what would you say to a mate who bought a brand new car and didn’t take out insurance on the car…..we’d all call them an idiot!” Yet the financially consequences of being unable to work for 6 months or more are potentially far greater, yet according to a 2012 study only 23% of Australians have income protection insurance.

The amount of people financially exposed in Australia due to underinsurance is frightening. According to TAL 55% of people acknowledge they are underinsured and the death or disablement of them or their partner would result in significant financial stress.

Australia has prided itself on the “She’ll be right” mantra, and this certainly runs true in personal insurance, although we all acknowledge that unfortunately people pass away unexpectedly all the time, and suffer serious sickness or injury that prevents them from working for a period of time, however we never think it will be us. Although we can’t prevent these things from happening we can protect ourselves and family financially.

A good financial planner will be able to assess your situation and determine the types and level of cover you require based on your individual needs.

The main reason why most of us don’t have insurance is apathy and the belief that it won’t happen to us, the other is the cost.  Many of us simply do not have spare cash flow to pay the premiums; others would like to direct any spare cash to other things such as investments or reducing the mortgage. In this case Superannuation maybe the answer, premiums can be funded via superannuation, this does have some consequences that should be discussed with a financial advisor, but it is an option to make insurance possible.

Although not the sexiest part of achieving our financial goals, insurance plays an important role in underpinning everything we do, and although we will never discuss the great income protection policy we just got, hopefully it prevents a conversation around having to sell the family home because we had no income for 12 months.